On January 5, 2024, President Ferdinand “Bongbong” R. Marcos Jr. signed into law the much-anticipated Ease of Paying Taxes Act (EOPT Act or Republic Act No. 11976). The Act was officially published in the Official Gazette on January 7, 2024, and it will come into effect 15 days after its publication, on January 22, 2024.

The EOPT Act brings substantial changes to the National Internal Revenue Code (NIRC) of 1997. Its primary objectives include protecting and safeguarding taxpayer rights and welfare, modernizing tax administration, promoting mechanisms that facilitate proper and straightforward compliance, updating the taxation system, and adopting best practices in taxation.

Key points of the EOPT Act include:

  • Taxpayer classification into micro, small, medium, and large categories with special concessions for micro and small taxpayers, such as simplified income tax returns and reduced penalties.
  • Electronic or manual filing and tax payment options to the BIR or authorized agents.
  • Removal of the requirement for tax deduction/withholding for deductibility of income payments.
  • Withholding taxes applied when income payments become payable.
  • Imposition of VAT on services based on gross sales, with the requirement for VAT invoices.
  • Use of a VAT invoice for substantiating input VAT claims.
  • Classification of VAT refund claims into low, medium, and high-risk.
  • Changes in the tax base for percentage taxes.
  • BIR action on refund claims within 180 days, with a 30-day appeal period.
  • Manual or electronic application for registration with the Revenue District Office.
  • Exclusion of business style requirements in VAT invoicing and registration.
  • Elimination of the annual Php500.00 registration fee.
  • BIR registration cancellation upon manual or electronic application.
  • Preservation of books for five years.

Note: The President vetoed a provision exempting micro taxpayers from the obligation to withhold taxes.